Research &

Forecast Report
Surabaya
2nd Half 2013

Surabaya Market Report

Office, Apartment, Retail & Hotel

Accelerating success.
Research &
Forecast Report
Surabaya | Office
2nd Half 2013

Surabaya Office Market Report

Accelerating success.
 Contents
Supply 3
Performance 6
Occupancy 6
Base Rental Rates 6
Service Charge 7

2 Research & Forecast Report | 2nd Half 2013 | Office | Colliers International

By Ferry Salanto
Associate Director | Research
Ferry.Salanto@colliers.com
“During the whole year of 2013
there were no new office buildings
beginning operation in Surabaya
and thus, the total supply at the
end of 2013 was unchanged from
2012’s figure. The total office space
in Surabaya is 278,598 sq m, only
representing 4% of the total office
space in Jakarta. In 2013, the
asking base rental rates increased
by 12.5% compared to 2012 to
IDR92,593/sq m/month.”
- Ferry Salanto
Colliers International
is a leader in global real estate services, defined
by our spirit of enterprise. Through a culture of
service excellence and collaboration, we integrate
the resources of real estate specialists worldwide to
accelerate the success of our partners. We represent
property investors, developers and occupiers in local
and global markets. Our expertise spans all property
sectors–office, industrial, retail, residential, rural &
agribusiness, healthcare & retirement living, hotels &
leisure.
3 Research & Forecast Report | 2nd Half 2013 | Office | Colliers International
Supply
Surabaya will see more high-rise buildings
Cumulative Office Supply in Surabaya
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
2008 2009 2010 2011 2012 2013 2014F 2015F 2016F
Existing Supply Annual Supply
Source: Colliers International Indonesia - Research
The office market in Surabaya saw no new office buildings
beginning operations this semester and thus, the total supply at
the end of 2013 is similar to 2012’s figure. The total office supply
in Surabaya is 278,598 sq m, but only represents 4% of the total
office space in Jakarta.
Despite the small current supply, the amount of office space will
continue to grow. It is projected that there will be an additional
193,081 sq m during 2014 - 2016. This projected supply will
be contributed by nine office buildings, five of which started
construction in 2013; they are scheduled to begin operations
during 2014 - 2015.
Construction activity of office buildings in Surabaya during
2013 showed slow progress. Several office buildings (including
Marvel, Praxis, Puncak CBD Bukit Golf ), which were originally
planned to start construction in 2013 and previously scheduled
for completion in 2014, seem to be rescheduled. In contrast,
other under-construction office buildings, namely MNC Tower,
Samator, Graha Pena extension, Skyline Office Tower and
Pakuwon Center, are still showing consistent progress, which
indicates that they could be completed during 2014 - 2015.
Cumulative Office Space Supply Based on Marketing Size Comparison Between Existing and Future Office
Scheme Buildings by Number of Projects
500,000
450,000 > 30,000 sq
m
400,000
350,000
20,001 -
300,000 30,000 sq m
250,000
200,000 10,001 -
20,000 sq m
150,000
100,000
0 - 10,000
50,000 sq m
0
2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F 0 2 4 6 8 10 12 14 16 18

For Lease For Strata-title Existing Building Future Building

Source: Colliers International Indonesia - Research Source: Colliers International Indonesia - Research

Comparison of Projected Office Supply (in early In the future, Surabaya City will see more skyscrapers being built.
2013) vs Projects Under Construction (end of 2013) Among them is Pakuwon Group, which is finalizing the highest
towers in Surabaya in the mixed-use development in Tunjungan
City, known as Tunjungan Plaza V. Property components at
Tujungan Plaza V include a shopping centre, the Pakuwon Center
150,000
office building and a condominium. One tower comprising
several components will be 50 storeys high.
120,000
In the coming years, office development in Surabaya will not be
dominated by local developers only. National developers are
90,000 eyeing Surabaya given the growth of East Java province. Large
developers, like Agung Podomoro Land, are preparing to open
60,000 branch offices in Surabaya as the first step in opening an office
gallery to display their projects.
30,000
Future Office Building Distribution by Region
0 Based on Number
2014F 2015F 2016F
Projected Future Supply (early 2013) Projected Future Supply (end 2013)

Source: Colliers International Indonesia - Research South East Surabaya

Surabaya 25%
33%
Not many of the projected office buildings will be large buildings.
The upcoming office buildings with a semi-gross area of above
30,000 sq m are Skyline Office Tower and One Galaxy. One Galaxy
will be developed within the Galaxy Mall mixed-use complex in
East Surabaya. Similarly, Skyline Office Tower is part of a mixed-
use development compound in Jalan A. Yani, South Surabaya.

Central
West Surabaya
Surabaya 25%
17%

Source: Colliers International Indonesia - Research

4 Research & Forecast Report | 2nd Half 2013 | Office | Colliers International
 Based on Size

East Surabaya
South 27%
Surabaya
39%

Central
Surabaya
15%

West
Surabaya
19%

Source: Colliers International Indonesia - Research

New Office Supply in the Pipeline (2014 - 2016)

OFFICE projects name location DEVELOPER SGA (sq m) Marketing Scheme

2014

Graha Pena II A. Yani PT Graha Pena Jawa Pos (Jawa Post 12,000 Lease
Group)
MNC Tower Ade Irma Suryani MNC Land 7,000 Lease

2015

Skyline Office Tower Mayjen Sungkono PT Menara Bumi Sejahtera 38,821 Lease & Strata-title

2016

Marvel City Ngagel PT Assa Land 12,000 Lease

The Samator Kedung Baruk PT Samator Land 25,000 Lease
One Galaxy Dharmahusada PT Puri Galaxy (Sinar Galaxy Group) 40,000 Lease
Office @Jalan A. Yani A. Yani PT Trikarya Graha Utama 30,000 Strata-title
Pakuwon Center Basuki Rahmat PT Pakuwon Jati 20,260 Lease & Strata-title
Royal Office Tower Menganti Wiyung PT Bhakti Tamara 8,000 Lease
Source: Colliers International Indonesia - Research

Skyline Tower The Samator MNC Tower

5 Research & Forecast Report | 2nd Half 2013 | Office | Colliers International
Performance
Occupancy; above 90% for offices in the business
district
As the business activities in Surabaya continue to grow, more
office space is required. Users or tenants of shop houses (Ruko)
and office houses (Rukan) are beginning to encounter issues
like security and parking capacity which are relatively not found
in the office building. In 2H 2013, the occupancy level rose
to 86.2%, compared to 83.3% in 1H 2013 (a correction of the
previous report). Office buildings located in Central Surabaya
still become the main contributor and continue to affect the
overall occupancy figure in Surabaya.
The Surabaya office market witnessed more vacant space at
Wisma BII, in Jalan Pemuda. The owner of this office building
converted the function room into offices, which created vacant
space and drove the occupancy rate lower than the previous
semester. Nevertheless, the occupancy rate at the end of 2013
was higher than that at the end of 2012, which was 83%.
Occupancy Rates Based on Area
100%
95%
90%
85%
80%
75%
70%
65%
60%
55%
50%
2008 2009 2010 2011 2012
Central Surabaya South Surabaya East Surabaya
West Surabaya average
Source: Colliers International Indonesia - Research
It is reported that a relocation from a building in the downtown
area will occur sometime in the middle of 2014 when Bank
Mandiri, the anchor tenant, will move to their own building.
Active tenants, like financial institutions, especially banks, still
dominate the office transactions in Surabaya. An office building
in A. Yani, South Surabaya, will be fully occupied by a bank. Later,
the building will become the bank’s headquarters for the East
Java region. New tenants in the trading, forwarding and finance
industries occupied most of the space in an office building in
Jalan Sudirman.
6 Research & Forecast Report | 2nd Half 2013 | Office | Colliers International
New Commitment for Future Office Buildings
The pre-commitment absorption at the upcoming office
buildings continues to increase. Graha Pena developer will
build an 11-storey building, which will enter the market in 2014.
It continues to attract some new tenants. One of the tenant is
an advertising company (Infomedia), who took two floors. The
upcoming 29-storey Skyline Towers in Jalan Mayjend Sungkono
has recorded a take-up rate of around 50%, and is scheduled to
be completed in 2015.
In some cases, an office building is built because of a landlord’s
internal need for office space. While providing space for their
own occupation, maximising plot ratio regulations of the land
will allocate space for commercial use. Having themselves as the
anchor tenant will reduce the marketing efforts for offering the
remaining space. Some developers, like MNC Land and Samator,
have been using this strategy by being the main anchor of the
building and selling the remaining space.
h-o-h Performance of the Office Market
IDR 100,000
2H 2013
IDR 90,000
1H 2013
Base Rental
IDR 80,000
IDR 70,000
IDR 60,000
IDR 50,000
50% 60% 70% 80% 90% 100%
Occupancy
Source: Colliers International Indonesia - Research
2013
Base Rental Rates; more than 10% increase
In 2013, the asking base rental rates have significantly increased
by 11.7% compared to the previous semester to IDR82,889 psm /
month (a correction of the last report). The average asking rental
rate, as of the end of the year, is IDR92,593 psm / month, which
means that average rental rates rose by 12.5% in one year. The
overall increase in the base rental rates is mainly from office
buildings located in Central Surabaya. Two office buildings that
have been operating for more than 20 years adjusted their base
rental rates in 2H 2013. One office building reported a significant
increase of 58% in one semester period by adjusting the pegged
rate by 25% to IDR10,000 per US dollar as well as adjusting the
rental rate itself. Due to the continued healthy performance
(90%) over the last five years and the periodic improvement of
the building’s quality, the owner confidently adjusted the base
rental rates in 2H 2013.
With demand projected to continue rising, an office building in
A. Yani (Graha Pena) also adjusted their base rental rates in 2H
2013 in line with the high quality of the building.
Range of Asking Base Rental Rates
East Surabaya
The increasing average base rental rate is more due to the
weakening rupiah against the US dollar. In Surabaya, there are
still some office buildings that charge in US dollars. With the
continual weakening of the rupiah, the exchange rate dropped to
IDR12,000 in 2H 2013 from IDR9,600 per US dollar in early 2013.
Further these buildings apply current floating exchange rate
which made the occupancy cost seems higher when converted
into rupiah.

Service Charge
West Surabaya
The increase electricity tariffs and the minimum wage also
affected Surabaya office market especially for service charges.
South Surabaya Currently, the average service charges for office buildings in
Surabaya recorded at IDR57,984/sq m/month. This figure
climbed 27.6% than previous semester (h-o-h period).
Central Surabaya
Summary Performance
0 40,000 80,000 120,000 160,000 200,000 period occupancy Base rental service charge

1H 2013 87.7% IDR 82,889 IDR 46,549

IDR/sq m/month
2H 2013 89.5% IDR 85,484 IDR 46,549
Growth 1.8% 3.1% 0%
Source: Colliers International Indonesia - Research
Source: Colliers International Indonesia - Research

7 Research & Forecast Report | 2nd Half 2013 | Office | Colliers International
Research &
Forecast Report
Surabaya | Apartment
2nd Half 2013

Surabaya Apartment Market

Report

Accelerating success.
 Contents
Strata Title Apartments 3
Supply 3
Demand 5
Asking Price 6
Apartments for Lease 7
Supply 7
Average Asking Rental Rates 7
Occupancy 8

2 Research & Forecast Report | 2H 2013 | Apartment | Colliers International


By Ferry Salanto
Associate Director | Research
Ferry.Salanto@colliers.com
“The apartment market so far is
still buoyant with investment sales
continuing through the second half
2013. This in turn has become the
driving factor for the rising apartment
prices in Surabaya within this period.
As almost all developers adjusted
their selling prices, the average asking
price of apartment in Surabaya rose
to IDR14.6 million/sq m, an increase of
7.4% in the six months period since 1H
2013. ”
- Ferry Salanto
Colliers International
is a leader in global real estate services, defined
by our spirit of enterprise. Through a culture of
service excellence and collaboration, we integrate
the resources of real estate specialists worldwide to
accelerate the success of our partners. We represent
property investors, developers and occupiers in local
and global markets. Our expertise spans all property
sectors–office, industrial, retail, residential, rural &
agribusiness, healthcare & retirement living, hotels &
leisure.
3 Research & Forecast Report | 2H 2013 | Apartment | Colliers International
Strata-title
Apartments
Supply
Two apartment projects were handed over during July to
December 2013 (second semester 2013 period) including Puncak
Kertajaya (Tower B) and Puri Mas Apartment, both located in
East Surabaya. The tower B of Puncak Kertajaya apartment is the
extension of tower A which was completed in early of 2013. Puri
Mas Apartment is a single apartment tower. By end of 2013, total
apartment unit in Surabaya rose 11% to 16,380 units.
East Surabaya region is now sharing a bigger portion as
apartment provider in Surabaya with two additional projects
during the second semester. Last semester, the East Surabaya
represent 32% of the total market and in this period it grew to 39%
making the region become the main high-rise residential area.
East Surabaya is the preferred locations for students associated
with university or any other institution.
West Surabaya remained the location for most apartment
projects, particularly along Jalan HR Muhammad, Jalan Darmo
Boulevard, and Jalan Raya Darmo. Thus far, the West Surabaya
remained as the region with the most apartment unit. The
growing residential estates is the push factor for apartment to
also grow within the region.
The Distributions of Apartment Units in Surabaya
South
Surabaya
9%
East
Surabaya
39%
West
Surabaya
48%
Central
Surabaya
4%
Source: Colliers International Indonesia - Research
 List of Apartment Projects Being Launched Between June - December 2013
Apartment projects name location Nunmber of Units Developers name

My Tower (3 towers) Kawasan Raya Rungkut Industri 1,200 PT Galaxy Wahyu Kencana
The City Square Jl. Raya Margorejo 160 PT Putra Mahakarya Sentosa
Grand Sungkono Lagoon (Venetian Tower) Jl. Abdul Wahab Siamin 500 PT Pembangunan Perumahan
Praxis Jl. Panglima Sudirman 293 PT Intiland
Source: Colliers International Indonesia - Research

Surabaya is a city with high economic growth. Quite a few major
corporations have headquarters in and around Surabaya. In
line with all the prospective indicators, the Surabaya residential
market remained upbeat. There has been new-player developers
that continued to introduce new apartment projects targeting at
various segments. Between June – December 2013, at least four
brand-new projects were launched in Surabaya, bringing 2,153
apartment units to the market.
The East Surabaya apartment market will see a faster growth
than West Surabaya in term of number of apartment units.
During 2014-2016, total supply in East Surabaya will account
for 11,178 units while the West will only have 8,046 units. This
means that 55% of the upcoming supply within that period will
be contributed by East Surabaya. At the end of 2016, cumulative
supply of apartment unit in Surabaya will be led by East Surabaya
with a portion of 48%, followed by West Surabaya with 43%.

The aforementioned projects spreads throughout four regions,
including East, Central, West, and South Surabaya and all
adopted mixed use development concept. My Tower apartment
project, consisting of three towers, is located within Rungkut
Industrial Estate, East Surabaya. Praxis, which located in Central
Surabaya, is mixed use project comprising office, retail space and
the apartment tower. Grand Sungkono Lagoon (Venetian Tower)
is part of Grand Sungkono Lagoon mixed use development,
comprising apartment, mall and office tower, and located in
West Surabaya. South Surabaya will have the additional supply
from The City Square which will also have other components like
hotel and office space in one building.
Going forward,the strata-title apartment market will be flooded
by a massive volume of new supply over the next few years.
The market will receive 20,398 new apartment units until 2016,
from around 19 projects, which will be a record-high should all
projects completed on time.
Two projects under construction including Educity Apartment
(4 towers) and Bale Hinggil Apartment (2 towers) will contribute
5,733 units which represent, 90% of 2013’s supply in East
Surabaya. Further, the construction of MERR (Middle East
Ring Road) has enticed developers to build more apartments
within the proximity of MERR. The MERR will connect southern
part of Surabaya to northern part through East Surabaya. With
such infrastructure planning, East Surabaya is becoming more
appealing area, not to mention that once MERR is completed,
it would be a lot easier to access the airport which is located in
Sidoarjo, a city next to southern part of Surabaya.
Existing and Future Apartment Supply Distribution
20,000
16,000

Apartment Supply Distribution During 2014 - 2016 12,000

Units

South 8,000
Surabaya
3%
4,000

0
East Central West South
West Surabaya Surabaya Surabaya Surabaya
Surabaya East
39% Surabaya
Current Future
55%

Source: Colliers International Indonesia - Research

Central
Surabaya
3%

Source: Colliers International Indonesia - Research

4 Research & Forecast Report | 2H 2013 | Apartment | Colliers International

 List of Apartment Projects Being Launched Between June - December 2013
development year location region units developer
The Peak Residence 2014 Jl. Basuki Rahmat Central 190 PT. Pakuwon
De Papillio Tamansari 2014 Jl. Ahmad Yani South 446 Wika Realty
Sumatra 36 2014 Jl. Sumatra 36 Central 63 Intiland
Orchad Mansion 2015 Pakuwon Indah West 940 PT. Pakuwon
Tanglin Mansion 2015 Pakuwon Indah West 940 PT. Pakuwon
Bale Hinggil Apartment (Tower A) 2015 Jl. Ir. Soekarno East 1,000 PT. Tlatah Gema Anugrah
Puncak Dharmahusada (2 Towers) 2015 Jl. Ir. Soekarno East 2,800 Puncak Group
Puncak Bukit Golf 2015 Jl. Raya Bukit Darmo Boule- West 2,000 Puncak Group
vard I
Voila Apartment 2015 Mayjen Sungkono West 216 PT. Ciputra Tbk
Marvell City (Linden Tower) 2015 Jl. Ngagel 123 East 360 Dian IstanaGroup
Educity Apartment (4 Towers) 2015 Jl. Kejawan Putih Mutiara No. East 3,618 PT. Pakuwon
17
Puncak CBD 2016 Jl. Mayjend Sungkono West 3,000 Puncak Group
Ritz Mansion 2016 Pakuwon Indah West 450 PT. Pakuwon
One East Residences 2016 Jl. Raya Kertajaya Indah No. 79 East 285 MNC Group
My Tower (2 Tower) 2016 Kawasan Raya Rungkut Industri East 800 PT Galaxy Wahyu Kencana
Gunawangsa MERR (Tower A) 2016 Jl. Kedung Baruk East 600 PT. Guna Wangsa Kreasindo
Gunawangsa MERR (Tower B) 2016 Jl. Kedung Baruk East 600 PT. Guna Wangsa Kreasindo
One Icon Residences 2016 Jl. Embong Malang Central 280 PT. Pakuwon
The City Square 2016 Jl. Raya Margorejo South 195 PT Putra Mahakarya Sentosa
Grand Sungkono Lagoon (Venetian Tower) 2016 Jl. Abdul Wahab Siamin West 500 PT Pembangunan Perumahan
Bale Hinggil Apartment (Tower B) 2016 Jl. Ir. Soekarno East 1,115 PT. Tlatah Gema Anugrah
Source: Colliers International Indonesia - Research

Demand Take-Up Rates of Existing and Pre-Sales

Apartment
Take-up rates of both existing and pre-sales apartment projects
only edged up mildly by less than 1% compared to 1H 2013 100%
period. The pre-sales rate of future apartment projects is
recorded at 57.3%, indicating a minor decrease of less than 1%
compared to 1H 2013. The take-up rate performance of existing 80%
apartment projects in all areas of Surabaya stabilized or was only
up slightly by almost 1%.
60%

40%

20%

0%
1H 2013 2H 2013

Source: Colliers InternationalExisting

Indonesia - Research Pre-sales
Source: Colliers International Indonesia - Research

5 Research & Forecast Report | 2H 2013 | Apartment | Colliers International

The take-up rate performances of strata-title apartment projects
by each region in Surabaya indicate that only Central and West
Surabaya regions experienced an upward sales trend compared
to semester albeit modestly. Sales performance in Central
Surabaya, as the center of business, edged higher by almost
4% due to limited number of new apartment projects being
launched. Although plenty of new projects are being in the
under construction stage, West Surabaya still record a positive
demand trend during this semester, increased modestly by
almost 2%. Meanwhile, the take-up rates of East Surabaya and
South Surabaya slowed moderately, by 0.7% and 2.1% compared
to previous period. East Surabaya saw abundant new supply
which can not counterbalanced the absorption pace.
Take-Up Rates of Apartment in Each Region of
Surabaya
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Asking Price
The apartment market so far is still buoyant with investment sales
activities were still recorded during the second half 2013. This in
turn become the driving factors for the rising apartment prices
in Surabaya within this period. As almost all developers adjusted
their selling prices, the average asking price of apartment in
Surabaya rose to IDR14.6 million/sq m, an increase of 7.42% in
the six months period (h-o-h) since 1H 2013.
Besides good absorption of both existing and under-construction
projects, price increases were also triggered by the launching
of new projects which were offered at higher prices at above
average market price. West Surabaya posted the highest increase
in the asking price, followed by South Surabaya with 9.8% and
7.7% respectively. East Surabaya, where most of the projects are
targeted at students and workers as the major buyers, recorded
4% increase from 1H 2013. On the other front, despite achieving
the highest asking price among any other region, Central
Surabaya experienced the lowest growth with 4% increase within
June – December 2013.
Average Asking Price of Apartments
IDR 15,000,000
IDR 14,800,000
IDR
IDR 14,600,000 14,637,720
IDR 14,400,000

1H 2013 2H 2013 IDR 14,200,000

East Surabaya Central Surabaya IDR 14,000,000

IDR 13,800,000
West Surabaya South Surabaya
IDR
IDR 13,600,000
Source: Colliers International Indonesia - Research
13,626,210
IDR 13,400,000
The implementation of new mortgage regulation to help curb
IDR 13,200,000
excessive loan growth and ease property speculation i.e. LTV
(Loan to Value) which issued by the central bank (Bank Indonesia) IDR 13,000,000
since October this year, seems to lessen sales activity. However, 1H 2013 2H 2013
some big developers in Surabaya leave no stone unturned in
order to attract buyers. One the most active apartment developers Source: Colliers International Indonesia - Research
in Surabaya offers easy payment plans that allow buyers to take
immediate possession of their properties by making installment
without down payment in the period of 48 months. For payment
through bank loan, one leading developer in Surabaya offers a
scheme whereby buyers pay 50% down payment by installment
within 40 months during construction and when the apartment
unit is ready to be occupied, the remaining 50% is paid using
mortgage.

6 Research & Forecast Report | 2H 2013 | Apartment | Colliers International

Average Asking Price in Each Region of Surabaya

IDR 30,000,000

IDR 25,000,000

IDR 20,000,000

IDR 15,000,000

IDR 10,000,000

IDR 5,000,000

IDR 0
1H 2013 2H 2013

East Surabaya Central Surabaya

West Surabaya South Surabaya

Source: Colliers International Indonesia - Research

Apartment price would potentially climb in the periods ahead

in anticipation of better infrastructure like MERR, etc. Besides,
the growing property development in the region together with
improved accessibility which shortened distance to urban
activities are determining factor for price to grow. The leading
developers in Surabaya which have been part of development
driver in city will continue to dominate competition in getting
the land which likely lead to the increase in apartment price.

7 Research & Forecast Report | 2H 2013 | Apartment | Colliers International

Image courtesy of ds-lands.com

Apartments for In the future, we hardly see adequate supply of apartment for
lease. A single tower apartment project developed by MNC Land

Lease
Supply
With no new supply appeared during 2H 2013, cumulative
supply of apartment for lease in Surabaya remains unchanged
and is steady at 591 units, comprising seven serviced apartment
and one non-serviced apartment projects.
As seen in the graph, the majority of apartments for lease are
concentrated In West Surabaya. Besides West Surabaya is the
most developed area in Surabaya, its close proximity to central
comprising of 33-storey will developed in East Surabaya. This
apartment is strata-title cum serviced apartment and will be
operated by Oakwood International to manage the 144 serviced
apartment units. Further, this project will be the first project with
combining strata-title and serviced apartment units in Surabaya.
Typically the existing serviced apartments are mostly attached to
hotel development.
Average Asking Rental Rates
Average Asking Rental Rates
IDR 200,000
IDR 168,294
IDR 166,676

IDR 160,000
The Distribution of Apartment for Lease by Region
in Surabaya
IDR 120,000
South
East
Surabaya
Surabaya
5%
12% IDR 80,000

Central
Surabaya
13% IDR 40,000

IDR 0
1H 2013 2H 2013

Source: Colliers International Indonesia - Research

West The average asking rental rates for serviced and non-serviced
Surabaya apartment in Surabaya experienced a slight improvement over
70% the second semester of 2013. The trigger for this period’s increase
was from Novotel Suites. Due to increasing level of inquiries,
the management became confident to adjust the rental rate
Source: Colliers International Indonesia - Research
about one million rupiah per unit for one month lease period.

8 Research & Forecast Report | 2H 2013 | Apartment | Colliers International

Overall, the average rental rates of apartment for lease in Further, long-term corporate tenants, mostly expatriates, are still
Surabaya was registered at IDR168,300/sq m/month, increased become the main generator for serviced apartment performance.
by 1% compared to 1H 2013. Corporate tenants from banking and other service industries,
as well as manufacturing industries which mostly from Asian
countries are still continue, as better hope of Indonesian
Occupancy economic in 2014.
Overall, the occupancy of apartment for lease recorded CHART “C” (OPTIONAL)
an upward trend in this mid-year point. The occupancy of
apartment for lease in Surabaya, which mostly composed of
• Width: 79mm
serviced apartment, achieved 76%, an increase by 4% from 1H
2013. By area, the occupancy rate of serviced apartment in East • Height: open
Surabaya is recorded at 90%, followed by Central Surabaya with
80%. Meanwhile, West Surabaya managed to post an average
occupancy rate by 71%. Benefiting from year-end holiday,
serviced apartment, particularly integrated with hotel extension,
achieved outstanding sales performance.

In the month approaching the new year celebration, such

promotions and attractive packages offered by serviced
apartment to entice prospective tenant who want to spend new
year eve in Surabaya. It seems that short-term occupiers help
maintain the current level of occupancy, particularly during
the period being reviewed. Moreover, there is one serviced
apartment in West Surabaya which achieved 100% occupancy
rate.

9 Research & Forecast Report | 2H 2013 | Apartment | Colliers International

Research &
Forecast Report
Research &
Forecast Report
2H 2013
Surabaya | Retail
2nd Half 2013

Surabaya Retail Market Report

Accelerating success.
 Contents
Supply 3
Performance 5
Asking Rental Rates 6
Concluding Thoughts 7

2 Research & Forecast Report | 2H 2013 | Retail | Colliers International


By Ferry Salanto
Associate Director | Research
Ferry.Salanto@colliers.com
“There was no new supply in the retail
market in Surabaya throughout 2013
and thus, the cumulative supply remains
unchanged at 957,088 sq m. This
condition will likely continue in 2014.
Additional shopping space scheduled
to be completed in 2015 and 2016, to
include both new retail centers and
the extension of existing projects. It is
projected that there will be 284,950 sq
m of new retail space added during this
time. The average asking rental rate for
retail center space in Surabaya remained
at IDR375,076/sq m/month in 2H 2013
which was only higher by 10.2% y-o-y.”
- Ferry Salanto
Colliers International
is a leader in global real estate services, defined
by our spirit of enterprise. Through a culture of
service excellence and collaboration, we integrate
the resources of real estate specialists worldwide to
accelerate the success of our partners. We represent
property investors, developers and occupiers in local
and global markets. Our expertise spans all property
sectors–office, industrial, retail, residential, rural &
agribusiness, healthcare & retirement living, hotels &
leisure.
3 Research & Forecast Report | 2H 2013 | Retail | Colliers International
Supply
The state of no new supply highlighted the retail market in
Surabaya throughout 2013. With no new retail centers, the
cumulative supply remains unchanged since early 2013 and
is recorded at 957,088 sq m. This condition will likely continue
in 2014. According to APPBI, an association of shopping
center owners and managers, there has no confirmation on
development schedule of new shopping centers in Surabaya.
At the present time, it becomes quite challenging to develop a
new shopping center in Surabaya. A continuous increase in land
price issue in Surabaya would probably one factor that hinder
shopping center development. For example, land price along
MERR (Middle East Ring Road) in East Surabaya was initially
offered at around IDR2 million/sq m. In line with the existence
of MERR, the potential growth of the surrounding become high
and land prices have jumped in the range of IDR17 - 20 million/
sq m within two years. It is also indicated that development
permit is somewhat slow to process. All in all, the lack of supply
during 2014 is mainly due to the development schedule from
developers, evidenced that in the subsequent year new retail
developments are already in the pipeline. For the last two years
mall developers is less aggressive in developing shopping centers
given the fact that mall performance grew on average.
Shopping center new supply in Surabaya will resume in 2015 and
2016 which includes both new retail centers and the extension of
existing projects. It is projected that there will be 284,950 sq m of
new retail space during those periods.
In addition to the list of developments mentioned in the previous
report, it is indicated that some new retail projects will be built
in Surabaya in 2015. Mostly these under-planning projects are
small retail centers with size below 10,000 sq m. Generally, these
retail centers are part of integrated development and will support
the existence of other property component, mainly apartment
project. Thus far, none of these projects has commenced the
construction works as monitored at the end of 2013.
New under-planning retail centers belong to Maspion and Lippo
Group are indicated to start the construction works in 2014.
Maspion will build new development namely Maspion City. This
future extension retail center later on will be part of the whole
development and designed with lifestyle mall concept.
Retail Cumulative Supply in Surabaya Distribution of Existing and Future Retail Supply up
to 2016 Based on Area in Surabaya
1,000,000
North
East
800,000 Surabaya
Surabaya
14%
16%
600,000

400,000

200,000 South
Surabaya
0 25%
Central
2014F Surabaya

2015F
2016F
2005
2006
2007
2008
2009
2010
2011
2012
2013

30%

Existing Supply Annual Supply West

Surabaya
Source: Colliers International Indonesia - Research 15%
Source: Colliers International Indonesia - Research
Based on area, retail projects are mainly located in the downtown
of Surabaya (Central Surabaya). The Central area in Surabaya In the next three years, no strata-title center being built in
continues to be the magnet for commercial activities. In the next Surabaya. Total supply of strata title retail remains at 368,567 sq
two years, again, the Central Surabaya remains as the primary m or 38.5% of the total retail supply in Surabaya contributed by
location for retail development. On the other front, the East and 14 retail centers.
West Surabaya area will continue to grow as more retail centers
will be built in these areas including the expansion of Galaxy Cumulative Supply Based on Marketing Scheme
Mall and Supermal Pakuwon extension.
1,000,000
Distribution of Existing Retail Supply Based on Area
in Surabaya 800,000
North East
Surabaya Surabaya 600,000
14% 13%
400,000

200,000

South 0
Surabaya
2014F
2015F
2016F
2005
2006
2007
2008
2009
2010
2011
2012
2013

27% Central
Surabaya
33%
For Lease For Strata-Title
Source: Colliers International Indonesia - Research
West
Surabaya
13%
Source: Colliers International Indonesia - Research

4 Research & Forecast Report | 2H 2013 | Retail | Colliers International

 New Supply Pipeline
retail centers projects name region NLA (sq m) Marketing scheme development status

2015

Lippo Mal Gubeng Central Surabaya 6,000 For Lease Under Planning
Hampton Square East Surabaya 8,000 For Lease Under Planning
JX Mall South Surabaya 9,200 For Lease Under Planning

2016

Mall @Praxis Superblock Central Surabaya 22,750 For Lease Under Planning
Marvell City East Surabaya 15,000 For Lease Under Planning
Mall @A. Yani South Surabaya 30,000 For Lease Under Planning
Ciputra World 2 Central Surabaya 34,000 For Lease Under Planning
Supermall Pakuwon 2 West Surabaya 60,000 For Lease Under Planning
Maspion Square 2 South Surabaya 30,000 For Lease Under Planning
One Galaxy Mall East Surabaya 60,000 For Lease Under Planning
Puncak CBD Jajar West Surabaya 30,000 For Lease Under Planning
Source: Colliers International Indonesia - Research

Performance The Average Occupancy Level in Each Region of

Surabaya During 1H - 2H 2013

In general, having tenants occupying a mall is not the main 100%

concerns for mall developers. On average the occupancy
performance seems relatively high. However, in some cases, the 90%
challenging part for the mall operator is to maintain adequate
visitors to come and to shop in the mall. To keep tenants paying 80%
the rent, mall operator has to make sure number of visitors.
70%
The overall occupancy rate for all retail centers (both retail for
lease/mall and strata-title retail /trade center) in Surabaya ai 60%
83.8% as at the second semester (2H 2013). This level is 2.9%
higher than the last semester’s figure. The occupancy level of 50%
some shopping centers located in South Surabaya posed a
1H 2013 2H 2013
significant increase during the reviewed semester. During 2H
2013, a shopping center located around Gubeng area recorded East Surabaya Central Surabaya
significant physical occupancy with only a few committed
tenants has not opened the stores. West Surabaya South Surabaya
North Surabaya
The occupancy performance of shopping centers for lease (mall)
is 85.1% as at the end of 2013. Meanwhile the occupancy level of
Source: Colliers International Indonesia - Research
strata-title shopping centers climbed by 4.7% compared to the
previous semester reaching 78.7%. Actually Surabaya as the second largest metropolitan city after
Jakarta becomes the target of retailers. The retailers mainly from
Based on region, except for West Surabaya, the other regions in
branded fashion industry both local and foreign are aiming
Surabaya achieved good occupancy performance in the range
to Surabaya. Moreover fashion trend in Surabaya is currently
of 80% to 91% in 2H 2013. Some prominent shopping centers
undergoing a significant phase due to growing mode in Surabaya
located in Central Surabaya even recorded the occupancy
today.
level of above 95%. Meanwhile, the average occupancy in West
Surabaya recorded the lowest of below 70% as at the end of 2013.
Number of retail center in West Surabaya is limited, however one
shopping center in this area experienced high vacancy which
dropped the overall shopping center performance.

5 Research & Forecast Report | 2H 2013 | Retail | Colliers International

Number of Operating Department Stores in Surabaya Asking Rental Rates and Service
Charges
Grand Palace
Adjusting asking base rental does not become the priority for
Cahaya developers today. Therefore, the average asking rental rate for
retail center in Surabaya remains at IDR375,076/sq m/month
Ramayana in 2H 2013. The asking rental rate was only recorded higher by
10.2% y-o-y.
Metro Asking Rental Rates Based on Region
Centro 600,000
SOGO 500,000
400,000
Matahari
300,000
0 1 2 3 4 5 6 7 200,000
100,000
Source: Colliers International Indonesia - Research
0
Number of Operating Hypermarkets in Surabaya

West Surabaya

South Surabaya

North Surabaya
East Surabaya

Central Surabaya
Giant

Source: Colliers International Indonesia - Research

Carrefour Thus far the increase in the regional minimum wage and
in the basic electricity tariff as well inflation rate have not
been responded immediately by all retail center in Surabaya.
Notwithstanding, with mounting operational cost of retail
centers, it is projected that the average service charges will be
Hypermart adjusted in near time. Currently, the average service charge was
recorded at IDR66,556/sq m/month, a minor increase of 1.8%
over the same period of 2012.

0 1 2 3 4 5 6 7
Source: Colliers International Indonesia - Research

6 Research & Forecast Report | 2H 2013 | Retail | Colliers International

Average Asking Price (/sq m) of Apartment in Jakarta Concluding Thoughts
IDR 400,000 The major challenge of retail market in Surabaya is to push
visitors to enliven the shopping centers. Although this is not a
general condition as quite a few shopping centers maintain their
loyal customer and have a descent level of visitors to maintain
IDR 300,000
the operation of the existing tenants, however some shopping
centers still underwent limited number of visitors. Even certain
malls have low vacancy with many stores opened it does not
IDR 200,000 sufficient to lift the overall performance of the mall because of
low traffic within the mall.

IDR 100,000 A number of shopping centers opt to maintain the current rental
tariff because they want to keep the occupancy level. During
2013, even the good performing shopping centers continued to
charge the same rental tariff. The overall rental cost adjustment
IDR 0
was only applied for operational component i.e. the services
2011 2012 2013 charge. Rental rates are expected to rise once the number of
visiting and buying shoppers increases.
Rental Rates Service Charges
Source: Colliers International Indonesia - Research

7 Research & Forecast Report | 2H 2013 | Retail | Colliers International

Research &
Forecast Report
Surabaya | Hotel
2nd Half 2013

Surabaya Hotel Market Report

Accelerating success.
 Contents
Supply 3
Demand 5
Performance 6
Average Occupancy Rates 6
Average Daily Room Rates 6
Conclusion 7

2 Research & Forecast Report | 2nd Half 2013 | Hotel | Colliers International

By Ferry Salanto
Associate Director | Research
Ferry.Salanto@colliers.com
“In 2H2013, three new hotels officially
began operation in Surabaya, including
the Swiss-Belinn (3-star), The Alana
Surabaya (4-star) and Santika Premier
(4-star). These hotels contributed 537
rooms to the market and bring the total of
hotel rooms in Surabaya to 7,156. From
2012 to 2013, the average occupancy rate
(AOR) of three-, four- and five-star hotels
in Surabaya slightly decreased from
65.6% to 61.4%. Nevertheless, with lower
occupancy performance compared to last
year the average daily room rate (ADR) of
star-rated hotels in Surabaya experienced
an increase from IDR449,991 in 2012 to
IDR481,415 in 2013. ”
- Ferry Salanto
Colliers International
is a leader in global real estate services, defined
by our spirit of enterprise. Through a culture of
service excellence and collaboration, we integrate
the resources of real estate specialists worldwide to
accelerate the success of our partners. We represent
property investors, developers and occupiers in local
and global markets. Our expertise spans all property
sectors–office, industrial, retail, residential, rural &
agribusiness, healthcare & retirement living, hotels &
leisure.
3 Research & Forecast Report | 2nd Half 2013 | Hotel | Colliers International
Surabaya is the second largest city after Jakarta, with a
population of over 3.1 million. It is a dynamic city and the centre
of commercial activity in eastern Indonesia. Surabaya has a more
commercial character and thus most of the hotels are business
hotels that provide easy accommodation for business travellers.
Supply
In the second semester of 2013 (2H 2013), three new hotels
officially began operations in Surabaya, including one three-star
hotel and two four-star hotels.
Saraswanti Group in collaboration with Aston International
operates a four-star hotel called The Alana Surabaya. Located in
Jalan Ketintang Baru, this hotel provides 162 rooms. The Alana
Surabaya hotel is part of Saraswanti Tower and is expected to
become alternative transit accommodation for those who come
from outside Surabaya.
Another four-star hotel that entered the market in 2H 2013 is
Santika Premiere Gubeng. This is the first four-star hotel in
Surabaya done by Santika Group. Previously, the Santika Group
hotel chain opened two three-star hotels (Santika Pandegiling
and Santika Jemursari) as well as one Amaris brand hotel in the
budget hotel class. The new hotel, which is located in Jalan Raya
Gubeng, has 232 rooms and is equipped with swimming pool,
fitness centre, ballroom, meeting room and business centre.
Swiss-Belinn, a hotel brand of Swiss-Belhotel, started operation
in Jalan Manyar, Surabaya. This three-star hotel provides 143
rooms and is the first Swiss-Belhotel operating in Surabaya.
With the influx of the aforementioned new hotels, total star-
rated hotel rooms in Surabaya increased by 8.11% in 2H 2013,
delivering a total of 7,156 rooms at the end of 2013.
Hotel Distribution Cumulative Supply of 3-, 4- and 5-star Hotel Rooms
Based on Number of Rooms in Surabaya

5,000

5-star 4,000
26%

3-star
38% 3,000

2,000

1,000

0
4-star 2008 2009 2010 2011 2012 1H 2H 2014P 2015P 2016P
36% 2013 2013

3-star 4-star 5-star

Source: Colliers International Indonesia - Research

Source: Colliers International Indonesia - Research

Based on Number of Hotels

5-star
14%

3-star
4-star 55%
31%

Source: Colliers International Indonesia - Research

4 Research & Forecast Report | 2nd Half 2013 | Hotel | Colliers International
 New Hotel Supply Pipeline
hotel name location Class no. of rooms status

2014

Quest hotel Aston Ronggolawe 3-star 135 Under Construction

Crown Prince Basuki Rahmat 3-star 120 Under Construction
Harris Mayjen Sungkono 3-star 263 Under Construction
Ibis Basuki Rahmat 3-star 180 Under Construction
Citadines Ngagel 3-star 288 Under Construction
Toma Jaksa Agung Suprapto 3-star 125 Under Construction
Rich Palace HR Muhammad 4-star 195 Under Construction
Casarita Margorejo 4-star 200 Under Construction
Swiss-Belhotel Darmo 4-star 232 Under Construction
Swiss-Belhotel Mayjen Sungkono 5-star 220 Under Construction

2015

Grandhika Ngagel 3-star 150 In Planning

Solaris Bagong Ginayan 3-star 180 In Planning
Swiss-Belinn Tunjungan 3-star 187 In Planning
Grand Clarion Raya Juanda 4-star 555 In Planning
Double Tree Basuki Rahmat 4-star 198 In Planning
Aryaduta Jend. A. Yani 5-star 245 Under Construction
Source: Colliers International Indonesia - Research

Demand The number of foreign tourists going to Surabaya via Juanda

Airport from January to October 2013 increased by 13% when
compared to the same period in 2012. However, the hotel market
Number of Foreign Visitors Coming Through in Surabaya is very much underpinned by domestic guests either
Juanda Airport from Surabaya City or the Province of East Java or other areas in
Indonesia.
400,000
Length of Stay (LOS) of Foreign and Domestic Hotel
Guests in Surabaya
300,000
3.50
3.00
200,000
2.50

100,000 2.00
1.50
0 1.00
2013 YTD
2005
2006
2007
2008
2009
2010
2011
2012

0.50
0.00
2013 YTD
2005

2006

2007

2008

2009

2010

2011

2012

Source: Tourism and Creative Department

foreign domestic

Source: Tourism and Creative Department

5 Research & Forecast Report | 2nd Half 2013 | Hotel | Colliers International
Foreigners stayed longer when they are in Surabaya compared
to domestic guests. The average length of stay (LOS) of foreign
guests in 2013 was higher 11.3% than in 2012 i.e. at 2.73 days.
Meanwhile, the average LOS of domestic guests dampened from
2012 to 1.65 days in 2013.
The hotel guest ratio in Surabaya is still dominated by domestic
guests (85% : 15%). Again, the hotel guest profile in Surabaya
is dominated by corporate guests mainly from government
institutions
Ratio of Hotel Guests (Foreign vs Domestic)
100%
80%
60%
The AOR during the second half of 2013 was low during the
first period, ie, during October 2013 because of low season.
During November until mid-December, occupancy was good,
mainly because government activity was intense during that
period. Entering the third week of December, coorporate activity
softened but was replaced by visitors from outside Surabaya,
from other regencies of East Java Province or even from other
areas outside of East Java Province. Guest profile during the year
end is largely family for shopping purposes in Surabaya. Malls in
Surabaya are the best in the eastern part of Indonesia. Further,
during the year end, malls in Surabaya actively hold interesting
events with good merchandise at the best prices. This has been
the magnet for shoppers coming from other cities or even from
Central Java. Besides shopping, these family type guests are also
transit guests flying to their main destination, ie, spending the
year end in Bali. Nevertheless, individual or family type guests
in Surabaya cannot lift the overall occupancy performance as
significantly as corporate guests because hotels in Surabaya are
business hotels and not leisure hotels.

40% Average Occupancy Rates

20% 100%

0% 80%
2013 YTD
2005

2006

2007

2008

2009

2010

2011

2012

60%

40%
foreign domestic
Source: Tourism and Creative Department 20%

0%

2013 YTD
2005

2006

2007

2008

2009

2010

2011

2012
Performance
3 star 4 star 5 star average
Average Occupancy Rates (AOR) Source: Tourism and Creative Department

During 2H 2013, the average occupancy rate (AOR) of three-,

four- and five-star hotels in Surabaya slightly decreased by 5.67%
when compared to 1H 2013. This was due to school holidays and
the month of Ramadan continued with Eid holiday. The highest
decline was experienced by three-star hotels (11.1%) followed by
four-star hotels (5.62%). In contrast, five-star hotel occupancy
underwent a slight increase by less than 1%.
Average Daily Room Rates (ADR)
The average daily room rate (ADR) of star-rated hotels in Surabaya
experienced an increase of less than 1% in the six month period
of 2H 2013. ADR of five-star hotels moved upwards by 2.4%, the
highest adjustment compared to any other category. At the end
of the year, ADR reached its peak because hotels hold New Year
celebrations that lure domestic guests from other cities and also
charge higher rates during the Christmas and New Year period.

6 Research & Forecast Report | 2nd Half 2013 | Hotel | Colliers International
 IDR 800,000
Conclusion
IDR 700,000 The coming years will be challenging for hotel developers
because competition among hotels will be high not only due to
IDR 600,000 confirmed projection of new hotels during 2014 to 2015 but also
CHART “C” (OPTIONAL)
because currently there are more than 30 hotels on the waiting
IDR 500,000
list for permit approval (according to Chairman of Surabaya
IDR 400,000 • Width: 79mm
Hotel Association).
IDR 300,000 While some • are
Height: open
worrying about the political situation in 2014,
IDR 200,000
the hotel market in Surabaya still predicts an optimistic year.
The political parties’ activity is projected to become potential
IDR 100,000 demand for hotel rooms in Surabaya, which is perceived as a
safe city. On top of that, Meeting, Incentive, Convention and
IDR 0
Exhibition (MICE) activity will continue in Surabaya. Hotels
2005

2006

2007

2008

2009

2010

2011

2012

2013 YTD
in Jakarta are better in terms of quality compared to hotels in
Jogyakarta; but Surabaya has many options for international
standard convention halls with lower rates compared to hotels
3-star 4-star 5-star average
in Jakarta.
Source: Colliers International Indonesia - Research
Overall, the hotel market in Surabaya is anticipated to raise
room rates due to mounting operational costs like increasing
provincial minimum wages and the hike in the electricity tariff.

7 Research & Forecast Report | 2nd Half 2013 | Hotel | Colliers International
482 offices in Primary Authors:
Ferry Salanto

62 countries on Associate Director | Jakarta

62 21 521 1400 ext 134
Ferry.Salanto@colliers.com

6 continents
United States: 140
Canada: 42
Latin America: 20
Asia Pacific: 195
EMEA: 85

Colliers International Indonesia

$2 World Trade Centre 10th & 14th floor

Jalan Jenderal Sudirman Kav. 29 - 31
billion in Jakarta 12920
Indonesia
annual revenue
TEL 62 21 521 1400

104
million square meters
under management

13,500
professionals
and staff

About Colliers International

Colliers International is a global leader in commercial real estate services, with over 13,500 professionals
operating out of more than 482 offices in 62 countries. A subsidiary of FirstService Corporation, Colliers
International delivers a full range of services to real estate users, owners and investors worldwide,
including global corporate solutions, brokerage, property and asset management, hotel investment
sales and consulting, valuation, consulting and appraisal services, mortgage banking and insightful
research. The latest annual survey by the Lipsey Company ranked Colliers International as the second-
most recognized commercial real estate firm in the world.

colliers.com

Copyright © 2013 Colliers International.

The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to
ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult
their professional advisors prior to acting on any of the material contained in this report. Accelerating success.